Mktg Ch. 14

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Promotional Mix

chapter 14

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The combination of one or more of the communication tools used to inform. (Advertising, personal selling, sales promotion, public relations, and direct marketing)

Can be used to:
1. Inform prospective buyers about the benefits of the product
2. persuade them to try it
3. Remind them about the benefits they enjoyed by using the product

Purpose: to provide a consistent message across all audiences...

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Integrated Marketing Communications (IMC)

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Concept of designing marketing communications programs that coordinate all promotional activities to provide a consistent message across all audiences

Key element in a company's customer experience management strategy

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Communication

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Process of conveying a message to others and it requires six elements
1. A source 2. A message 3. A channel of communication 4. A receiver 5. The processes of encoding 6. Process of decoding

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Source
Message
Channel of Communication
A receiver

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Source: May be a company or person who has info to convey

Message: The information sent by a source, such as a description of a new cellular phone

Channel of Communication: message is conveyed by means of this ...such as a salesperson, advertising media or public relations tool

Receivers: consumers who read, hear or see the message

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Encoding & Decoding

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Encoding: process of having the sender transform an idea into a set of symbols

Decoding: the process of having the receiver take a set of symbols, the message, and transform the symbols back to an idea
1. performed by receivers according to their own frame of reference: attitudes, values and beliefs

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Errors in Communication

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1. Source may not adequately transform the abstract idea into an effective set of symbols,
2. A properly encoded message may be sent through the wrong channel and never make it to the receiver
3. Receiver may not properly transform the set of symbols into the correct abstract idea
4. Feedback may be so delayed or distorted that it is of no use to the sender

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Field of Experience

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For the message to be communicated effectively, sender and receiver must have a mutually shared field of experience...similar understanding and knowledge they apply to the message

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Feedback Loop

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Consists of a response and feedback

Response: impact the message had on the receiver's knowledge, attitudes, or behaviors
Feedback: sender's interpretation of the response and indicates whether the message was decoded and understood as intended

Pretesting: ensures messages are decoded properly

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Noise

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Includes extraneous factors that can work against effective communication by distorting a message or the feedback received

Can be a simple error (printing mistake that affects meaning of a newspaper advertisement) or occur when a salesperson's message is misunderstood by a prospective buyer (accent, slang)

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Promotional Elements (5)

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Mass Selling: Advertising, Sales Promotion, and Public Relations ...used w/ groups of prospective buyers

Customized Interaction: Personal Selling using this b/w seller and prospective buyer...(face to face, telephone)

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Advertising

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Any paid form of nonpersonal communication about an organization, product, service or idea by an identified sponsor

Paid: space for advertising message normally must be bought
Nonpersonal: advertising involves mass media which are nonpersonal and do not have an immediate feedback loop as does personal selling

Before message sent: marketing research...determines that target market will see the medium chosen, message will be understood

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Advertising Advantages

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1. It can be attention-getting ...can communicate specific product benefits to prospective buyers
2. Company can control what it wants to say and to some extent to whom the message is sent
3. Allows company to decide when to send the message and how often

Nonpersonal Advantages:
1. Once created, same message is sent to all receivers in a market segment
2. Advertiser can ensure ad's ability to capture consumers' attention and trust that the same message will be decoded by all receivers n market segment

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Disadvantages of Advertising

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1. Costs to produce and place a message are significant
2. Lack of direct feedback makes it difficult to know how well message has been received

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Personal Selling

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Two way flow of communication b/w buyer and seller designed to influence a person's or group's purchase decision

Face to face communications b/w sender and receiver

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Personal Selling Advantages

Disadvantages

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1. Salesperson can control to whom the presentation is made...reducing amt. of wasted coverage ( communication w/ consumers who are not in target audience)
2. Seller can see or hear potential buyer's reaction to message...if feedback unfavorable...salesperson can modify message

Disadvantages:
1. Diff. salesppl can change message so that no consistent communication is given to all customers
2. High cost of personal selling...most expensive of 5 promotional elements

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Public Relations

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Form of communication management that seeks to influence the feelings, opinions or beliefs held by customers about a company and its products or services
Tools: special events, lobbying efforts, annual reportsn and image management..publicity often plays most important role

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Public Relations cont.
...Publicity

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Publicity: nonpersonal, indirectly paid presentation of an organization, product or service...can take form of news story, editorial, product announcement

Diff. b/w publicity and advertising and personal selling...indirectly paid dimension....w/ publicity, company does not pay for space in mass medium but attempts to get medium to run a favorable story on company

Advantage of Publicity: credibility
Disadvantage: lack of user's control over it

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Sales Promotion

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Short term inducement of value offered to arouse interest in buying a product or service...used in conjunction w/ advertising or personal selling.

Offered to intermediaries as well as to ultimate customers

Advantage: Short term nature of these programs often stimulates sales for their duration...offering value to consumer who are not store loyal

Cannot be sole basis for campaign...gains are often temporary and sales drop when deal ends...advertising support needed to convert the customer who tried product because of sales promotion into long term buyer

If done continuously, they lose effectiveness

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Direct Marketing

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(One of the fastest growing forms of promotion) Uses direct communication w/ consumers to generate a response in form of an order, a request for further info or a visit to a retail outlet

Often consists of interactive communication (like personal selling)

Advantage of being customized to match needs of specific target markets ...messages can be developed and adapted quickly to facilitate one to one relationships w/ customers

Disadvantages:
1. Most froms require a comprehensive and up to date database w/ info about target market...developing and maintaining this database can be expensive and time consuming
2. Growing concern about privacy has led to decline in response rates among some customer groups

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Putting together the promotional mix...Promotional Planning Process

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1. the balance of the elements must be determined
2. B/c the various promotional elements are often the responsibility of diff. depts, coordinating a consistent promotional effort is necessary...Promotional Planning Process

Target Audience, Product Life Cycle, Channel of Strategies

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Target Audience

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Promotional programs are directed to the ultimate consumer, to an intermediary or to both

Promotional programs directed to buyers of consumer products often use mass media...b/c # of potential buyers is large....Personal selling used at place of purchase...Direct marketing used to encourage first time or repeat purchases ...Combinations are necessary

Intermediaries are often the focus of promotional efforts...

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Product Life Cycle

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Composition of promotional mix changes over the four life cycle stages
1. Introduction Stage: Informing consumers in an effort to inc. their level of awareness ..primary promotional objective....All promotional mix elements used at this time
2. Growth Stage: Primary objective is to persuade the consumer to buy the product..Advertising used to communicate brand difference, personal selling used to solidify channel of distribution
3. Maturity Stage: need is to maintain existing buyers...Advertising reminds buyers of product's existence, Sales Promotion in form of discounts, coupons and events to maintain loyal buyers
4. Decline Stage: Period of phase out for product and little money is spent in promotional mix

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Channel Strategies ...Push Strategy...Pull Strategy

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Push Strategy: directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product
1. personal selling and sales promotions play major roles....salesppl call on wholesalers to encourage orders and provide sales assistance
2. by pushing product through channel, the goal is to get channel members to push product to their customers

Pull Strategy: In some cases, manufacturers face resistance from channel members who do not want to order new product or inc. inventory levels of existing brand
1. by directing its promotional mix at ultimate consumers to encourage them to as retailer for product
2. Seeing demand from ultimate consumers, retailers order the product from wholesalers and thus item is pulled through intermediaries

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Developing an IMC Program: Identifying the Target Audience

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1st step in developing promotion program involves identifying target audience..the group of prospective buyers toward which a promotion program will be directed

Behavioral Targeting: collecting info about your web browsing behavior to determine the banner and display ads that you will see as you surf

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Developing an IMC Program: Specifying Promotion Objectives

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A decision must be reached on what the promotion should accomplish

Hierarchy of Effects: sequence of stages a prospective buyer goes through from initial awareness of a product to eventual action (5 stages)
1. Awareness: consumer's ability to recognize and remember the product or brand name
2.Interest: an inc. in consumer's desire to learn about some of the features of the product or brand
3. Evaluation: consumer's appraisal of the product or brand on important attributes
4.Trial: consumer's actual first purchase and use of product or brand
5. Adoption: through a favorable experience on first trial, consumer's repeated purchase and use of product or brand

Promotional Objectives should posses 3 important qualities: 1. be designed for a well defined target audience 2. be measurable 3. cover a specified time period

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Developing an IMC Program: Setting the Promotion Budget

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Company must decide how much to spend

Determining the ideal amt. for budget is difficult b/c there is no precise way to measure the exact results of spending promotion dollars...several methods used:
1. Percentage of Sales: the amt. of money spent on promotion is the percentage of past or anticipated sales
2. Competitive Parity: matches the competitor's absolute level of spending or the proportion per point of market share
3. All you can afford: allows money to be spent on promotion only after all other budget items are covered
4. Objective and Task: the company 1) determines its promotion objectives 2) outlines the tasks to accomplish those objectives and 3) determines the promotion cost of performing those tasks...takes into account what company wants to accomplish and requires objectives be specified

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Developing an IMC Program: Selecting the Right Promotional Tool

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The combination of the 5 basic IMC tools (advertising, personal selling, sales promotion, public relations and direct marketing) can be specified

Analytical approach and experience are particularly important

Specific mix can vary from simple program using single tool to comprehensive program using all forms of promotion..ex olympics

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Developing an IMC Program: Designing the Promotion

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The promotion itself

Design of each of the promotional program elements

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Developing an IMC Program: Scheduling the Promotion

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Determine the most effective timing of their use

Promotional schedule describes the order in which each promotional tool is introduced and the frequency of its use during the campaign

Overall...scheduling of the various promotions designed to generate interest, bring consumers in and encourage additional purchases

Factors:
1. Seasonality
2. Competitive promotion activity
Can influence promotion schedule

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Developing an IMC Program: Executing and Assessing the Promotion Program

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The ideal execution of a promotion program involves pretesting each design before it is actually used to allow for changes and modifications that improve its effectiveness

Posttests: recommended to evaluate the impact of each promotion and the contribution of promotion toward achieving the program objectives

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IMC Program

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To fully benefit, companies must create and maintain a test result database that allows comparisons of the relative impact of promotional tools and their execution options in varying situations

Information from database will allow informed design and execution decisions and provide support for IMC activities during internal reviews by financial or administrative personnel

Important factor in developing successful IMC program is to create a process that facilitates their design and use

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Direct Marketing

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Growth of direct marketing: ability to customize communication efforts and create one to one interactions is appealing to most marketers

Value of Direct Marketing: level of use...convenience for customer
1. Value for sellers: can be described in terms of responses it generates
Direct Orders: result of offers that contain all the info necessary for a prospective buyer to make a decision to purchase and complete the transaction
Lead Generation: result of an offer designed to generate interest in a product and a request for additional info
Traffic Generation: outcome of an offer designed to motivate ppl to visit a business